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Negotiating Rates and Contracts for Qualifying Facilities

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Abstract

The implementation of a cogeneration project or other qualifying facility (QF) requires the development of contractual relationships with one or more electric utilities. The relationships may involve the application of existing rates and contracts and/or the development of new rates and contracts. This process is often impeded by lack of effective communication between the QF and the utility, and is further complicated by the lack of utility expertise and perspective on the part of the QF. This paper describes the key issues involved in the development of purchase rates, as well as supplemental power services, and contract terms and conditions. Attention is given to special issues such as wheeling, losses, and regulatory proceedings. A general approach is described for maximum effectiveness in dealing with utilities for the successful negotiations of rates and contracts.